Windows Mobile 6.5 Debuts But Is It Too Late?

Microsoft trotted out a cornucopia of nifty new products and services at the Mobile World Congress in Barcelona on Monday, not least of which is a long-awaited Windows Mobile 6.5 update.

The announcements also included a competitor to Apple's MobileMe service  dubbed My Phone  and an online application store that bears more than a passing resemblance to the iTunes App Store, named Microsoft Marketplace for Mobile.

A major question remains, however: Will it help improve Microsoft's (NASDAQ: MSFT) also-ran image in the smartphone space?

"We need to take our Windows Mobile business to yet another level. The time has come for us to start bringing the full Windows experience to mobile phones," Microsoft CEO Steve Ballmer told a press conference at the conference.

To that end, Microsoft also announced deals with Orange, LG, and HTC, which will ship new phones that will use Windows Mobile 6.5 when it's available in the second half of this year.

Several analysts say the announcements are significant, but they disagree as to Microsoft's long-term chances in the mobile devices arena.

"While the user interface is much improved, it is not best in class, but it keeps them in the game," Philippe Winthrop, research director for business mobility solutions at Strategy Analytics, told InternetNews.com

That doesn't mean that he's writing Microsoft off, though. "The investments [in mobile] say they are committed to this space. They need to build momentum and this is the first step in the ramp up phase," Winthrop added.

"It's an important, incremental step they're on the right path regarding the services," Matt Rosoff, analyst at Directions on Microsoft said.

However, Rosoff told InternetNews.com that he has his doubts that Microsoft's plans are fully cooked. "It looks like their 'full on' taking on Apple strategy isn't ready yet," Rosoff said.

Microsoft has been trying to keep Windows Mobile 6.5 under wraps for months although many of the details of the system had already leaked out before this week's conference.

On the list of additions coming in 6.5 will be a dashboard-like user interface access e-mails, texts, missed calls, and calendar appointments. It also features what Microsoft says is an improved touch-screen interface. The new browser is based on Internet Explorer 6.

Meanwhile, Microsoft's free My Phone service takes a cue from Apple's MobileMe. It will provide users with storage for information on their mobile devices, along with capabilities to manage and back up their personal data.

"Apple charges $99 per year while Microsoft does it for free," Rosoff said.

Microsoft Marketplace for Mobile might be a tougher sell, he added. After all, the Apple iTunes App Store has thousands of applications for sale for the iPhone, including one from Microsoft.

Microsoft officials also mentioned in passing the long rumored Windows Mobile 7 but didn't give any information out regarding what Microsoft hopes will finally give it parity with the iPhone  including no dates whatsoever. Oft-repeated rumors, though, place Windows Mobile 7's debut sometime in 2010.

Will Microsoft succeed?

The question remains, however  not whether Microsoft will play a role in the evolving smartphone markets  but rather, how much of a role and for how long?

"I think that the Windows Mobile operating system will fade and they'll [Microsoft] build a shell on top of Linux," Mathias predicted. Why? Because of costs.

Profit margins on mobile phones are tight and anywhere a device maker can save a dime, it will. Windows Mobile is expensive in comparison to Linux, so he predicts that Linux will win out longer-term.

"Windows Mobile is the high-priced spread," Mathias said. "The first thing [device makers] do is look for ways to cut costs. The trend [to Linux] is well underway, and will become dominant in three years."

That prognosis may take a while before it becomes conventional wisdom, however.

A Canalys worldwide market report found that, in the third quarter of 2008, of the nearly 40 million smartphone operating systems shipped, Symbian held the lead with almost 19 million. Apple came in at almost 7 million, while RIM's Blackberry pulled in fourth place at just over 6 million. Microsoft was in a whopping fifth place with 5.4 million.